Time frame considerations when valuing heavy equipment

Used equipment supply and demand changes — as well as commodity market fluctuations — can have a profound effect on equipment values. The same asset can be worth substantially more or less in a matter of months. Bill Albaugh sat down last fall to explain why it's always crucial for ag and construction dealerships to look to the future when placing values on their used equipment trade-ins.

I think that's an important question when evaluating equipment weather it's — you're an ag lender or you're an ag finance company or a finance company that's finances heavy equipment or an equipment dealer or an auction house — you need to look at what today's market is versus what six months ago leading up to today's market was. There's variables that happen within those six months. For instance, this year, you know we've got COVID. We had derecho winds in Iowa. We had drought areas, you know — areas that were saturated with rain. We've had hurricanes. There's all these different circumstances that happen within the stream of time between six months ago and now, and so as you look at your valuation of your equipment you want to look at today's market and then three to six months down the road. Today's market is today's market. You know, you want to bring a piece of equipment in and turn it real quick like, whether it's a retail sale, whether it's on an auction — whatever happens, you want to turn that equipment as soon as possible because your cash is tied up in it. So you need to look at today's market three to six months ahead of the game. It's October right now, so you need to look at today's market in October of 2020. November, December, January, February, March — what's the market look ahead of you because that's when you're going to be selling that piece of equipment. You aren't selling it six months ago, you're selling ahead of the game. So if you see things that are coming down the pike, whether it's ag trade, weather it's tariffs, weather — you know, what other economic impacts that may happen in the next months, they all have impacts on equipment values. So you need to take a look at today's value when you value that piece of equipment and into the future and not into the past. Because the past is the past, and whatever value you try to look at based off of data from six months ago, things change because you're going to be wanting to turn that equipment now or within the next six months. 

The HeavyWorth platform aggregates all valuation photos and information in one place, making it easy to find and update over time as markets shift. If you're interested in learning more about how our software can streamline the entire valuation process for trade-ins of ag and construction equipment, contact us today!